Ripple CEO Brad Garlinghouse has moved to calm investor anxieties following intensifying scrutiny of Linqto, a private investment platform that sold access to Ripple equity through secondary markets.
Garlinghouse issued a statement on July 2 clarifying that Ripple has no formal relationship with Linqto, asserting that the platform was never authorized to sell Ripple shares directly.
Ripple Distances Itself From Linqto Sales
Garlinghouse confirmed that Linqto acquired 4.7 million Ripple shares by purchasing them from existing shareholders in secondary markets, not from Ripple itself. “Ripple has never sold equity directly to Linqto,” he said.
His comments aim to reassure stakeholders who feared Ripple might have played a role in questionable sales practices at Linqto.
Ripple’s leadership also revealed that the company stopped approving Linqto-related secondary transactions in late 2024, citing concerns about the platform’s operations and compliance.
Understandably, there have been many questions from those who believed they were buying Ripple shares from Linqto, and what happens next. To be clear, on Ripple’s end:
What we know from our records is Linqto owns 4.7M shares of Ripple, solely purchased on the secondary market… https://t.co/XHstpwwmIL
— Brad Garlinghouse (@bgarlinghouse) July 2, 2025
Also Read: Pro-XRP Attorney Deaton Exposes Linqto’s Shocking Plan to Seize Investor Gains
Complex Ownership Structure Raises Investor Questions
Echoing Garlinghouse, Ripple CTO David Schwartz explained that customers buying Ripple equity on Linqto did not receive direct ownership of Ripple shares. Instead, they acquired interests in special-purpose vehicles (SPVs) that held Ripple stock.
Schwartz described this mechanism as a common arrangement in private equity but acknowledged it could be confusing to retail investors.
Schwartz elaborated that investors effectively own a fractional interest in an SPV that aggregates Ripple shares, clarifying: “you don’t own the shares directly, but you own a portion of a legal entity that owns.”
Regulatory Scrutiny Intensifies as Allegations Surface
The controversy surrounding Linqto has deepened with ongoing investigations by the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ).
According to reports, former Linqto CEO William Sarris is being investigated for allegedly inflating the value of Ripple shares by more than 60% and selling them without proper authorization.
Investigators are also focusing on Linqto’s sales to non-accredited investors, which could represent a violation of federal securities laws. Prominent crypto attorney John Deaton highlighted that roughly 11,500 Linqto users bought SPV units thinking they were acquiring actual Ripple shares.
Alarmingly, he estimates that 5,000 of these investors are non-accredited, posing significant regulatory risks.
“These are not Ripple shares as many believed, but units of SPVs holding Ripple stock,” Deaton stated. “The involvement of thousands of non-accredited investors makes this a compliance nightmare.”
Investors Face Uncertain Future as Linqto Accounts Remain Frozen
The situation has deteriorated further following Linqto’s internal shake-up. New management has acknowledged that client accounts were frozen in February 2025. The company is reportedly preparing a Chapter 11 bankruptcy filing, which could leave investors exposed as unsecured creditors.
Legal experts warn that bankruptcy proceedings could lead to prolonged battles over asset distribution, particularly if regulatory agencies move to enforce penalties.
Conclusion
While Ripple has moved swiftly to distance itself from Linqto’s practices, thousands of investors remain caught in limbo amid investigations and potential bankruptcy proceedings. The episode serves as a stark reminder of the risks inherent in secondary markets for private equity, especially in the crypto sector.
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